Indian large companies must borrow 25 percent in bonds from as early as April 1: SEBI

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The logo of the Securities and Exchange Board of India (SEBI) is pictured on the premises of its headquarters in Mumbai, March 1, 2017. REUTERS/Shailesh Andrade/Files

MUMBAI (Reuters) - Indian companies with outstanding long-term borrowing of 1 billion rupees ($14.11 million) or more will have to raise a fourth of their fresh financing needs in bonds as early as April 1, 2019, the Securities and Exchange Board of India (SEBI) said on Monday.

For those who follow a calendar year as their financial year, the effective date will be Jan. 1, 2020, SEBI said in a statement. reut.rs/2DZmqOt

The proposal announced in the budget in February was a part of policymakers’ efforts to deepen India’s relatively shallow corporate bond market.

The large companies will need to have 25 percent of their fresh borrowing needs with a maturity of more than one year funded from the corporate bonds market on an annual basis by the last day of the financial years 2020 and 2021 separately, SEBI said.

Subsequently from the financial year 2022, the rule gets more stringent where companies must meet the incremental 25 percent borrowing requirement over a “contiguous block of two years”, the regulator added.